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the fact that BMY had served as the debtor's accountants pre-petition did not constitute grounds to deny their employment as the debtor's bankruptcy accountants. Next, the court addressed the UST's argument that BMY should be denied compensation because it sought and received payments on its pre-petition claim outside of the debtor's plan, and sought and obtained payment for post-petition services without court authorization. Regarding the post-petition fees, the court found that the failure to obtain prior court approval of those fees was inadvertent. Nonetheless, the court noted that even inadvertent failure to comply with the applicable law could result in forfeiture of compensation. Regarding BMY's efforts to collect on its pre-petition claim, the court found that this conduct violated the stay. The court found that BMY's conduct in this respect had been egregious, thus warranting a reduction in fees and even sanctions. The court ultimately reduced BMY's fees of $57,867.20 by $25,000, awarding a total of $32,867.20.
i. In re Living Hope Southeast, LLC, 2014 WL 1509321 (Bankr. E.D. Ark. 2014)
Issue: Whether creditor can recover expenses as administrative priority claim for "substantial contribution."
Holding: Standard for awarding fees, on administrative priority basis, to attorneys employed by party in making "substantial contribution" in case is identical to standard governing payment of attorney fees for counsel to bankruptcy trustee. Creditor's actions need not result in cash or other assets entering the bankruptcy estate in order for creditor to be entitled to administrate expense claim on "substantial contribution" theory. (1) Services that creditor rendered in acting as principal catalyst for appointment of Chapter 11 trustee were compensable on priority basis as administrative expenses incurred by creditor in making "substantial contribution" to case, though creditor may also have benefited from trustee's appointment and have pursued motion for personal reasons, and though United States Trustee, a day prior to hearing on creditor's motion for appointment of trustee, may have filed a separate motion for trustee that by and large adopted creditor's arguments. (2)Fees are not allowable for services incurred in furtherance of creditor's own interests in settlement negotiations with debtor or in opposing debtor's request to substitute counsel. (3) Services that creditor rendered in opposing Chapter 11 debtor's request to substitute counsel were not compensable on priority basis as administrative expenses incurred by creditor in making "substantial contribution" to case, where it was only Chapter 11 trustee who formally objected to hiring of substitute counsel, and neither creditor nor her counsel argued or presented evidence in opposition.
ii. In re Lehman Bros. Holdings Inc., 508 B.R. 283 (S.D.N.Y. 2014),
Issue: United States Trustee (UST) objected to application filed by individual members of
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